Yesterday’s Wall Street Journal had possibly the most dire article I’ve ever read on a company’s viability. Unfortunately, the article wasn’t online, but here are some highlights:
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General Motors Corp. capped a dismal 2008 with a $9.6 billion loss in the fourth quarter, brining its loss for the year to $30.9 billion.
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GM burned through $5.2 billion in cash during the fourth quarter… and $19 billion over the year…
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GM is now subsisting on $13.4 billion in government bailout loans… [and is asking for] as much as $16.4 billion more… GM also said it needs $7.5 billion in loans from the Energy Department to build more fuel-efficient vehicles.
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GM’s auditors must make a decision on the company’s “going concern” status by the end of March.
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GM also reported a major reversal in the health of its pension funds. It said its U.S. pension commitments for hourly and salaried retirees are underfunded by $12.4 billion… In early 2008, the company said the pensions were overfunded by $18.8 billion.
In addition, the earning report revealed a profound deterioration of GM’s once-booming operations outside the US. It reported a fourth-quarter loss of $1.9 billion in Europe, $917 million in Asia, and $181 million in Latin America.
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Wow. Just wow. General Motors is a dead company. GM’s net worth went from negative $39 billion at the end os 2007 to negative $86 billion at the end of 2008. GM sold 8.144 million cars worldwide in 2008, meaning that they lost $2333 per vehicle.
As the article points out, GM now wants an additional $23.9 billion in loans. Those loans come from us, the US taxpayers. Folks, the math doesn’t work. There is no way GM can pay off these loans and build net worth into positive teritory. GM is a dead company that is being propped up with absolutely no chance of recovery. It’s like Weekend at Bernie’s, except this is the real-life destruction of wealth, with the blessing and aid of the politicians in Washington. We, the taxpayers, are getting absolutely screwed.
We can debate the reasons for the death of GM, but the fact is that the continued life support of General Motors is irresponsible, destructive, and dangerous.
Add the bailouts of GM and Chrysler ($17+ billion, so far) to the bailouts of banks ($750 billion), AIG ($150 billion), Fannie Mae and Freddie Mac ($400 billion), and we have the looting of the Treasury going on right before our eyes. The bill, so far, is already over $1.3 trillion. That’s just in the last five months.
Yet, the looting continues. Change we can believe in, right?
By the way, this isn’t a partisan issue. Both parties are destroying America. …And it’s probably too late to do anything about it. Are you prepared?